Constellation Investors Are Betting Big on an Earnings Rally

While beer gets most of the attention, Constellation’s Wine & Spirits segment delivered arguably the quarter’s biggest turnaround.

Revenue soared 17% to $159.4 million, depletions jumped 10.2%, and shipments climbed 15.4%.

More importantly, the segment swung from a $19.8 million operating loss last year to a $6.1 million profit this quarter. Mi CAMPO depletions soared roughly 51%, while Kim Crawford grew around 11%.

It’s still a small piece of Constellation, but the turnaround is finally showing up in the numbers.

Constellation’s Beer operating income rose just 1% to $964.2 million despite 5% sales growth, while operating margin contracted 160 basis points to 39.0%.

And the second half of the year could get tougher.

Management expects beer operating margins of just 34.5% to 35.5% in H2, with Q3 marketing spending set to exceed 11% of sales.

That helps explain why Constellation stock is down 5% after Q2 earnings despite an earnings beat.

Constellation Brands beat expectations in Q2, but the numbers underneath its beer business were more mixed.

Beer revenue rose 5% to $2.47 billion as shipments jumped 5.5%, yet consumer depletions actually fell 0.6%.

The weakness hit Constellation’s two biggest names, Modelo and Corona. Modelo Especial depletions fell roughly 2% while Corona Extra dropped about 5%.

Pacifico was the standout, growing roughly 19%, but Constellation will need its flagship brands to stabilize if beer growth is going to accelerate from here.

Constellation Brands just reported Q2 earnings, with shares initially flat following the report. Here are the key numbers:

• Revenue: $2.63B vs. $2.54B expected
• Adjusted EPS: $3.74 vs. $3.55 expected

Guidance:

• FY2027 Adjusted EPS: $11.20–$11.90 vs. $11.71 expected
• Organic Revenue Growth: -1% to +1%
• Adjusted Operating Margin: 32%–33%
• Free Cash Flow: $1.6B–$1.7B

Quick Read:

• Constellation beat on both lines, with revenue 3.5% above estimates and adjusted EPS beating by 5.4%.
• Beer revenue grew 5%, but depletions fell 0.6% and beer operating margin contracted 160 basis points to 39.0%.
• Management reaffirmed its FY2027 outlook, including adjusted EPS of $11.20–$11.90.

This live blog is being updated by Thomas Richmond, a 24/7 Wall St. contributor. Simply stay on this page, and new updates will appear below automatically.

We expect Constellation Brands to release Q2 earnings shortly after 4:05 p.m. ET.

Constellation Brands (NYSE: STZ) reports fiscal Q2 earnings at 4:05 PM ET today, with Wall Street expecting roughly $3.55 per share. That would be below the $3.63 reported a year ago, while estimates have been trending lower ahead of the print.

Expectations are already low. Constellation shares have been under pressure heading into earnings as investors worry about softer beer demand and margin pressure.

Management has also warned of higher costs, while its current full-year outlook calls for beer sales ranging from a 1% decline to 1% growth and beer operating margins of 37% to 38%.

That makes tonight’s report an important test of whether bad news is finally priced in. Constellation now trades at roughly 11 times trailing earnings and carries a dividend yield around 3.6% and free cash flow yield near 9.5%.

If Modelo and the broader beer portfolio show signs of stabilization while margins hold up, even a modestly positive report could give investors a reason to reconsider the stock’s depressed valuation.